INTRODUCTIONonedivii)the hillüíI 9O~,the British scientist francs Galtorlleh his borneiii Iliewtt’nof Pl~iTlOtitOBad head cI for aCOtintfl’fair. (;alton was eighlv-h\’e years oldanti beginningto feelukage.hIJIhe was still brimmingwIth 11)5’ curiosity taut hao won himrenown —-antiDIII I)YletVfor his ivorkDI)slatjslics andIhe scienceof llcreditv. AntiOIi[hal parlicular day. \~hai(alton was curious,lI)OtIt\Vasiiye stock.(Jalton’s destination was the annual \~st of Englanc: I atStock and PonilivI :xhihition a regional fair where the local farm-ers and townspeople gatheredU.appraist. (lie quaiit~ of eachothers cattle, sheep, chickens, horse arIdpigs. \\haderingthrotlghrowstdstalls examining isnrkhorses andprit.e hogs may Seem 10have beena sirange way for a scientist les1,et-iall~an elderly one)IC)spend analtt’rI)OOn,1)111 there was a certain logic10is.. (~dltonwas a man obsessed\~twoIhiogs: the measurement of physicalithand mental qualities, and Urceding. And whai. alter all is a live-stock shots bum a big showcasebrthe effect:; of goodaIid badbreeding?l3reetling mattered to Galton because lie believedthaton) aicry Few penile had the characteris~mcsnecessary to keep socielies[ICiltin:I le had deo aeti muchothis career to measuring thosecharacteristics n fact, in ordertoprove thai tIM’VaSl IbflhiorItV of-

XIIINYflODUCYIONpeopledidnot have them. At the International Exhibition of 1884in London, for instance, he set up an“Anthropometric Laborator)ç”where he used devices of hisownmaking to testexhibition-goerson, among other things, their“Keennessof SightandofHearing,ColourSense,Judgment of Eye,[and]Reaction Time.” His exper-iments lefthimwith little faith in the intelligence of the averageperson, “thestupidity andwrong-headedness ofmanymenandwomen being sogreatas to be scarcelycredible.” Only if power andcontrol stayed in thehandsof the select, well-bred fet~Galton be-lieved, could asociety remainhealthyandstrong.As hewalked throughthe exhibition that day, Galton cameacrossa weight-judging competition. Afatox had been selected andplacedon display, and members ofa gatheringcrowd were lining upto placewagerson theweight of theox. (Orrathe~were plac-theybigwagerson what the weight ofthe ox would beafterithad been“slaughtered and dressed.”) Forsixpence, you could buy a stampedand numbered ticket, where you filled in your name,your address,andyour estimate. The bestguesses would receive prizes.Eight hundred people tried their luck. Theywerea diverse lot.Many ofthemwere butchers and farmers, who werepresumably ex-pert atJudging the weight oflivestock, but there were also quite afewpeoplewhohad, asitwere, no insiderknowledgeofcattle.“Many non-experts competed,” Galton wrote later in the scientificjournalNature,“like those clerks and otherswhohave no expertknowledge of hones, butwhobet on races, guidedbynewspapers;friends,andtheirownfancies.” The analogy to ademocraqc inwhich people ofradicallydifferent abilities and interests each getonevote, hadsuggesteditself to Galtonimmediately “Theaveragecompetitorwasprobably as well fitted formakinga just estimate ofthe dressed weight of the ox, as an averagevoteris ofjudging themeritsofmostpoliticalissues on which he votes,” he wrote.Gakon wasinterestedin figuring out what the “averagevote?was capable of because hewanted to provethat the average voterwas capable ofvenj little.So he turned thecompetitioninto an im-

)PITRODUCTIONXIIIpromptuexperiment. Whenthe contest was overand the prizeshad been awarded, Galton borrowed thetickets fromtheorganiz-ersandran a series ofstatisticaltests on them. Galtonarrangedtheguesses(which totaled 787 in all, after he had to discardthirteenbecause theywereillegible) in orderfromhighest to lowest andgraphedthem to see iftheywould form abellcurve. Then, amongother things, he addedallthe contestants’ estimates,andcalcu-lated the mean of the group’s guesses.Thatnumber represented,you couldsay,thecollectivewisdomofthe Plymouth crowd. If thecrowd were a single person, thatwashow muchitwould haveguessed the ox weighed.Galton undoubtedly thought that the average guess of thegroup would be wayoff themark.After all, mix a few verysmartpeople with some mediocre people and a lot ofdumb people, anditseemslikelyyou’d end upwitha dumbanswetBut Galtonwaswrong. The crowd had guessed that the ox, afterithad beenslaughteredanddressed, would weigh 1,197 pounds. Afterithadbeen slaughteredanddressed, the ox weighed 1,1% pounds. Inother words, the crowd~sudgment wasessentiallyperfect. Perhapsjbreedingdid not meanso much afterall.Caltonwrotelatet“Theresultseemsmorecreditableto the trustworthinessofa democraticjudgment thanmighthave been expected.” That was, to say theleast,an understatement.IIWhatFrancis Galton stumbled on that day in Plymouthwasthesimple, but powerful,truththat is at the heart ofthis book. undertherightcircumstances, groupsareremarkably intelligent, and areoften smarter than the smartest people in them. Groups do notneed to be dominated by exceptionally intelligent people in order tobesmart.Even if most of the peoplewithina grouparenot espe-cially welJ-info~ed rational,itcan still reach a collectively wiseor

XIVINTRODUCTIONdecision. This is a good thing, since human beings are not perfectlydesigned decision makers.Instead, we are whatthe economist Her-bert Simon called “houndedly rational.”Wegenerally havelessin-formation thanwe’d like. Wehave limited foresight into thefuture.Mostofus lackthe ability—and the desire—to make sophisticatedcost-benefit calculations.Instead ofinsisting onfindingthe bestpossibledecision,wewilloftenacceptonethatseems goodenough.Andweoftenlet emotionaffectourjudgment. Yet despite all theselimitations, whenourimperfectjudgmentsareaggregatedintheright way ourcollective intelligenceis oftenexcellent.This intelligence, or what I’ll call thewisdomofcrowds,” is atwork in the world in many different guises. It’s the reason the Inter-net search engine Google can scan a billion Web pages and find theone page that has the exact piece of information you were lookingfor It’s the reason it’s so hard to make money betting on NFLgames, and it helps explain why for the past fifteen years, afewhundred amateur traders in the middle of iowa have done a betterjob of predicting election results than Gallup polls have. The wis-dom of crowds has something to tell us about why the stock marketworks (and about why every so often, it stops working). ‘The idea ofcollective intelligence helps explain why when you go to the con-venience store in search of milk at two in the morning, there is acarton of milk waiting there for you, and it even tells us somethingimportant about why people pay their taxes and help coach LittleLeague. It’s essential to good science. And it has the potential tomake a profound difference in the way companies do business.in one sense, this book tries to describe the world as itis,looking at things that at first glance may not seem similar but thatare ultimately very much alike. But this book is also about theworld as it might be. One of the striking things about the wisdomof crowds is that even though its effects are all around us, it’s easyto miss, and, even when it’s seen, it can he hard to accept. Most ofus, whether as voters or investors or consumers or managers, be-lieve that valuable knowledge is concentrated in a very few hands

INTRODUCTIONXV(or, rather, in a very few heads). We assume that the key to solvingproblems or making good decisions is finding that one right personwho will have the answer. Even when we see a large crowd of peo-ple, many of them not especially well-informed, do somethingamazing like, say predict the outcomes of horse races, we are morelikely to attribute that success to a few smart people in the crowdthan to the crowd itself. As sociologists Jack B. SoIl and RichardLarrick put it,wefeel the need to “chase the expert.” The argumentof this book is that chasing the expert is a mistake, and a costly oneat that. We should stop hunting and ask the crowd (which, ofcourse, includes the geniuses as well as everyone else) instead.Chances are, it knows.IIICharles Mackay would have scoffed at the idea that a crowd ofpeople could know anything at all. Mackay was the Scottish jour-nalist who, in 1841, publishedExtraordinaiy Popular Delusions andthe Madness of Crowds,an endlessly entertaining chronicle of massmanias and collective follies, to which the title of my book payshomage. For Mackay crowds were never wise. They were nevereven reasonable. Collective judgments were doomed to be ex-treme. “Men, it has been well said, think in herds,” he wrote. “Itwill he seen that they go mad in herds, while they only recover theirsenses slowly and one by one.” Mackay’s take on collective mad-ness is not an unusual one. In the popular imagination, groups tendto make people either dumb or crazy or both. The speculatorBernard Baruch, for instance, famously said: “Anyone taken as anindividual is tolerably sensible and reasonable—---as a member of acrowd,he at once becomes a blockhead.” Henry David Thoreaulamented: “The mass never comes up to the standard of its bestmember, but on the contrary degrades itself to a level with the low-est.” Friedrich Nietzsche wrote, “Madness is the exception in mdi-

XVIINTRODUCTIONvidualsbutthe rulein groups,” while the English historianThomasCarlyle putitsuccinctly: “1 do not believe in the collective wisdomofindividual ignorance.”Perhaps the most severe critic of the stupidity of groups wasthe French writer Gustave Le Eon, who in 1895 published thepolemical classic TheCrowd:AStudyofthe Popular Mind.LeEonwas appalled bytherise of democracy in the West in the nine-teenth centur)ç and dismayed by the idea that ordinary peoplehadcome to wield politicalandcultural power. Buthis disdainforgroupswent deeper than that. A crowd, Le Eon argued, was morethanjust the sum ofitsmembers. Instead,itwas a kind of inde-pendentorganism.ft had an identity and awillofitsown, and itoften acted in waysthatno onewithinthe crowd intended. Whenthe crowddidact, Le Eon argued,itinvariablyacted foolishly. Acrowdmight be braveor cowardly or cruel, butitcould never besmart. As he wrote, “Incrowdsitisstupidityand not motherwitthatis accumulated.” Crowds “can never accomplish acts demand-ing a high degree of intelligence,” andtheyare “alwaysintellectu-ally inferior to the isolatedindividual.” Strikingl)cfor Le Eon, theidea of“the crowd” includednotjust obviousexamplesof collectivewildness,like lynch mobs or rioters. It also included just aboutanykind of group that could make decisions.So Le Eonlambastedjuries, which “deliver verdicts ofwhicheachindividualjuror would disapprove.” Parliaments, he argued,adopt laws that each of theft members would normally reject. Infact, if youassembled smartpeople who werespecialistsin a hostof different fields and asked them to “make decisions affectingmattersofgeneral interest,” the decisions they would reach wouldbe no better, on the whole, than those “adopted by a gathering ofimbeciles.”Overthe course of this book IIbilow Le Ron’s leadingivingthe words “group” and “crowd” broad definitions, using thewords torefer to everythingfromgame-show audiences tomultibillion-dollarcorporationsto a crowd ofsportsgamblers.Some of the groups in

INtRODUCTiONXVIIthis book, like the management teams in Chapter 9. are tightly or-ganized and very much aware of their identities as groups. Othercrowds, like the herds of cars caught in traffic that I write about inChapter 7, have no formal organization at all. And still others, likethestock market, existmainlyas an ever-changing collection ofnumbersand dollars. Thesegroups areall different, but they havein commonthe ability to act collectively to make decisions andsolve prohlems—even if the people in the groups aren’t alwaysawarethat’s what they’re doing. And what is demonstrahly true ofsome of these groups—namely, that they aresmartand good atproblem solving—is potentiallytrueofmost,if not all, of them. Inthat sense,Gustave Lel3on had things exactly backward. if you puttogether a big enough and diverse enough group of people and askthem to “make decisions affecting matters of general interest,” thatgroup’s decisions will, over time, be “intellectually (superiorj to theisolated individual,” no matter how smart or well-informed he is.‘VJudging the weight of an ox is hardly a complex task. But, as I sug-gestedabove, collectiveintelligence can be brought to bear on awide variety of problems, and complexity is no bar. in this book, Iconcentrate on threekindsof problems. The first are \.vhat I’ll callcognition problems.‘Fhese are problems that have or will have de-finitive solutions. For example, “Who will wintheSuper Bowl thisyear?” and ‘How many copies of this new ink-jet rinter will we sellinthe next three months?” are cognition problems. So, too, is “Howlikely is it that this drug will he approved by the FDA?” Questionstowhich there may not he a single right answer, but to which someanswers arecertainlybetter than others—such as, “What would hethe best place to build this new publicswimming pool?”—are cog-nition problems, too.The second kind ofproblem iswhat’susuallycalled acoordi-

XVIIIINTRODUCTIONnationproblem. Coordination problems require members of agroup (market, subway riders, college students looking for a party)to figure out how to coordinate their behavior with each other,knowing that everyone else is trying to do the same. How do buy-ers and sellers find each other and trade at a fair price? How docompanies organize their operations? How can you drive safely inheavy traffic? These are all problems of coordination.The final kind of problem is acooperationproblem. As theirname suggests, cooperation problemsinvolvethe challenge of get-tingself-interested, distrustfulpeople to work together, even whennarrowself-interestwould seem to dictate that no individualshould take part. Paying taxes, dealing with pollution, and agreeingon definitions of what counts as reasonable pay are all examples ofcooperationproblems.A word aboutstructure.The first half of this book is, youmight say, theory although leavened by practical examples. There’sa chapter for each of the three problems (cognition, coordination,and cooperation), and there are chapters covering the conditionsthat are necessary for the crowd to he wise: diversity, indepen-dence, andaparticular kind of decentralization. The first half be-gins with the wisdom of crowds, and then explores the threeconditionsthat make it possible, before moving on to deal with co-ordination and cooperation.The second part of the book consists of what are essentiallycasestudies.Each of the chapters is devoted to a different way oforganizing people toward a common (or at least loosely common)goal, and each chapter is about the way collective intelligence ei-ther flourishes or flounders. In the chapter about corporations, forinstance, the tension is between a system in which only a few peo-ple exercise power and a system in which many have a voice. Thechapter about markets starts with the question of whether marketscan be collectively intelligent, and ends with a look at the dynam-ics of a stock-market bubble.There are many stories in this book of groups making bad

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